Thomas M. Keating, Attorney
Hodes Keating & Pilon
134 North LaSalle Street, Suite 1300
Chicago, IL 60602
RE: The tariff classification and 301 determination of electric starters from Mexico
Dear Mr. Keating:
In your letter dated February 1, 2019 you requested a tariff classification ruling on behalf of your client, Johnson Electric North America, located in Plymouth MI.
The product under consideration has been identified as “1999-1140027”, which is a direct current (DC) electric motor fitted with a small pinion capable of travelling up and down a shaft to temporarily couple with and start an internal-combustion engine used on a residential lawn riding tractor. You state, and this office concurs, that the HTSUS classification of the finished good is 8511.40.0000, which provides for, “Electrical ignition or starting equipment of a kind used for spark-ignition or compression-ignition internal combustion engines…; parts thereof: Starter motors.…”
The applicable subheading for the Starter Motor, Item “1999-1140027”, will be 8511.40.0000, HTSUS, which provides for “Electrical ignition or starting equipment of a kind used for spark-ignition or compression-ignition internal combustion engines (for example…starter motors); generators (for example, dynamos, alternators) and cut-outs of a kind used in conjunction with such engines; parts thereof: Starter motors…. The rate of duty will be 2.5% ad valorem.
In your letter, you also request a determination of whether the product is covered by additional ad valorem duties on certain Chinese imports that the United States Trade Representative (“USTR”) has imposed pursuant to its authority under Section 301(b) of the Trade Act of 1974 (“Section 301 measures”). As of the date of this ruling, USTR has published three lists of Chinese-origin products covered by the Section 301 measures.
On July 6, 2018, USTR implemented Section 301 measures on products of China listed in U.S. Note 20(b) of Subchapter III, Chapter 99, HTSUS, which are subject to an additional 25% ad valorem rate of duty. On August 23, 2018, USTR implemented Section 301 measures on products of China listed in U.S. Note 20(d) of Subchapter III, Chapter 99, HTSUS, which are subject to an additional 25% ad valorem rate of duty. On September 24, 2018, USTR implemented Section 301 measures on products of China listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS, which are subject to an additional 10% ad valorem rate of duty.
Among the subheadings listed in U.S. Note 20(f) of Subchapter III, Chapter 99, HTSUS, is 8511.40.00, HTSUS. Accordingly, if the merchandise is a product of China, it will be subject to the additional 10% ad valorem duty.
While the NAFTA marking rules contained in 19 C.F.R. Part 102 will determine the country of origin for marking purposes, the substantial transformation test will determine the country of origin for purposes of the Section 301 measures. See, e.g., Headquarters Ruling (“HQ”) H301619, dated November 6, 2018.
The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character or use, different from that possessed by the article prior to processing. See Texas Instruments Inc. v. United States, 69 C.C.P.A. 151 (1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
In this case, you state that the starter motor will be manufactured in Johnson Electric’s factory in Zacatecas, Mexico, using parts from China and other countries. The product consists of five (5) components: the stator or housing, the rotor or armature assembly, the brush card assembly, the motor cap and pinion assembly, and motor assembly. All five (5) subassemblies appear to be classified in subheading 8511.90, HTSUS.
You provided a detailed explanation laying out the manufacturing practices in Mexico. For example, the housing, or stator subassembly, is manufactured through a fourteen (14) step process, which consists of cold rolling Japanese steel, stamping the rolled steel into a housing, gluing and curing the stamping, installing ferrite bars and magnetizing, tolerance testing, and final inspection, while the rotor, or armature assembly consists of a twenty (20) step manufacturing process, which includes lamination cutting, knurling, winding, fusing, and final inspection. It is the opinion of this office that the foreign parts used in the foreign manufacturing lose their individual identity and become new, different articles of commerce.
The information provided demonstrates that the foreign parts were imported into Mexico where they were manufactured into subassemblies, which were ultimately assembled into the subject electric starter motors. The foreign parts did not have a pre-determined end-use before importation, and they did undergo a change in use due to the assembly process preformed in Mexico. Based on the information provided, the production process performed in Mexico goes beyond mere “simple assembly,” and the foreign subassemblies are therefore substantially transformed in Mexico. Accordingly, the merchandise will be a product of Mexico, and the Section 301 measures will not apply.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Matthew Sullivan at firstname.lastname@example.org.
Steven A. Mack
National Commodity Specialist Division